August 11, 2022

IT Outsourcing In Vietnam: EOR, PEO/ GEO – Which Solution Is Best For Your Business?

- 8 min read

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Employing both local and foreign workers must comply with the minimum salary established by the Vietnamese government. However, employing a foreigner in Vietnam is difficult.

This cumbersome and time-consuming procedure is restricted by a number of restrictions and regulations regarding the positions that foreigners may hold.

Foreigners are subject to different tax and payroll requirements, and it may not be cost-effective to provide relevant training to your HR and accounting teams.

In this post, we will explore the various types of IT outsourcing in Vietnam as well as the means by which enterprises can employ foreigners without forming a formal entity in Vietnam.

IT Outsourcing in Vietnam with Employer of Record (EOR)

Employer of Record (EOR) is a service provider that employs workers on their payroll, but the workers are employed by other businesses. EOR allows firms to hire overseas workers prior to having a physical presence in Vietnam. This is especially advantageous for foreign employers that wish to develop their businesses into Vietnam.

Additionally, it works for businesses who do not intend to establish operations in Vietnam but wish to outsource procedures such as IT support and customer service. In general, EOR assists businesses in managing the following:

Payroll
Tax Forms
Employment contracts
Candidate hiring and background checks.

How is EOR Different from Professional Employer Organization (PEO)?

Co-employment services are provided by PEO in partnership with existing small and medium-sized businesses. Although the primary function of PEO is to assist with contract management, the contract is between the employee and the client utilizing PEO services. This can substantially decrease legal risk and streamline administration.

The main difference between EOR and PEO is:

The EOR provider is the sole legal employer of the payroll employees. The EOR vendor is already established in locations where corporations wish to grow their operations; the company can lawfully engage its personnel in these countries without a legal entity and without any employment duties.
A PEO vendor, on the other hand, is not a full legal employer, but rather a provider that shares employer risks and provides additional employee litigation protection. Since the PEO provider is not mentioned in the employment contract, it has no legal responsibilities.

In general, these two types of HR outsourcing correspond to distinct workforce strategies.

While PEO is appropriate for organizations seeking external help with HR functions, EOR is ideal for enterprises hoping to expand fast or without the burden of creating a legal entity in Vietnam.

What about GEO?

Global expansion is frequently the best option for organizations that wish to expand their corporate footprint beyond their home country, gain access to larger talent pools, and tap into new revenue streams.

However, entering foreign countries can be difficult. This is why an increasing number of organizations are choosing to collaborate with GEO firms. The term GEO stands for Global Employment Outsourcing.

These services are supplied by multinational employment businesses that can function as a client company's legal EOR.

GEO services are meant to help you handle numerous administrative HR responsibilities and simplify the international expansion path when:

Working in a country where your company is not registered;
Establishing a new legal entity;
Understanding local labor regulations and tax ramifications.

An EOR is a company that is legally responsible for labor compliance. This is especially significant if you are operating in a country where your organization does not have a formal presence. An EOR can help you with a variety of duties, such as:

Administration of payroll and taxes
Employee advantages
Foreign exchange and intra-country money transfer
Employment agreements
Insurance
Local regulations

What distinguishes an EOR from a GEO?

EORs are often used as part of a larger GEO strategy. A GEO is a service that assists businesses of all sizes in mobilizing a staff in a foreign country. The GEO will adhere to all national and local labor regulations, taxes, and work licenses. They may also employ an EOR to manage the payroll functions for the workers.

The GEO serves as a single point of contact for the company that is employing the GEO service to perform EOR. An EOR could potentially be used as a temporary option until a local entity and activities are established.

Expand your business into Vietnam without establishing a legal entity

Groove Technology offers worldwide employment solutions to companies looking to hire staff and distribute payroll in Vietnam. We manage your company's payroll, benefits, and expenses in Vietnam using our Vietnam EOR & PEO. We also manage human resources, as well as employment and tax compliance.

Groove Technology will operate as your workers' Vietnam EOR, allowing you to start doing business in Vietnam without the need for a local corporation. This not only allows your company to go to market faster, but it also has the potential to save your company thousands of dollars in expansion expenditures.

Groove Technology, the only Vietnam PEO with an in-house recruitment team, will source, hire, and onboard your Vietnamese personnel. We hire staff in compliance with Vietnamese labor laws and manage all expenditure claims and benefit payments.

Simplify your global business expansion with Groove

Employees are hired on your behalf and seconded back to you under a particular project agreement with PEO/EOR services. This approach greatly simplifies worldwide company expansions by allowing the client to acquire employees immediately.

Perform sales operations, market research, and launch the company in a specific location without establishing a new corporation in a new country.

Our global employment solutions

Global Employment Organization (GEO)

Groove's GEO assists businesses in expanding their international talent acquisition initiatives. An employer of record can assist firms in hiring from anywhere in the world without the need to set up a foreign organization.

An employer of record can help you get your overseas hires on-boarded and on the job within days by allowing you to bypass time-consuming international business formation requirements.

Best for organizations without an in-country presence and/or local HR help.

Record service provider
Payroll of employees (calculation of pay from gross to net)
Possibility of providing Groove Technology employee benefits.

International Payroll Services

For businesses with an entity but no local HR help.
Pay calculation from gross to net
Payroll procedures and reconciliations
Expense tracking and payment
Tax returns and payments
End-of-year compliance reporting
Equalization of taxes
Allowance administration
Tracking PTO and accruals
Employee enquiry administration
HRIS Administration

Groove Technology It Outsourcing In Vietnam: EOR, PEO/ GEO - Which Solution Is Best For Your Business?

Groove's GEO assists businesses in expanding their international talent acquisition

Global HR Consulting

Entity formation and administration
Services for project management
Organizational structure
Cost-cutting/synergy assessments
Payroll implementations in-house
Outplacement services for HRIS implementations
Learning and Growth
System for Learning Management (LMS)
Generation of content
Leadership training programs
Academies for new hires

Dedicated Team Services at Groove

Besides outsourcing services mentioned above, Groove Technology can offer you dedicated team services with fewer HR burdens, and you can focus on your core business. Over the years, we have already had the standard process of providing the right talents to advance your team capacity in the long run.

Our dedicated team process:

Requirement discovery: Research and define the project requirements with related resources. An in-depth analysis will ensure that we are on the right track from the beginning.
Proposal and pilot team: select the right people; propose the suitable resources; conduct interviews (direct interview, cv, or use video about developers talking, introducing about themselves); put together a pilot team
Contract & development: form the entire team; sign the contract; manage, assign tasks, communicate directly with the staffs about the development process.
On-boarding: It will be all hands-on deck on our side. You will receive support from the delivery manager, solution architect, and other skills we think might benefit you.
Scale-up: You will evaluate the hired staff on a monthly or quarterly basis so that we can continuously improve. You can add more staffs to your team as you need.

Conclusion

Established in 2016 to provide contractor verification, compliance, and payroll, the contingent workforce market has remained our primary focus, with services being provided all around the globe by local experts. Our corporate offering has developed over the years as a result of increased market complexity, legislation, technology, and client demand.

Groove Technology may now act as an extension of your HR and Procurement department, managing your whole contingent workforce. Groove Technology is unique in that, in addition to managing visibility, cost, and control, we enable your talent-first approach, providing access to new and known talent and enhancing the engagement and performance of your staff.

FAQs

Should I work with a PEO or an EOR?

A Professional Employer Organization, or PEO, is another option. A PEO does not hold the employment relationship and related risk, whereas an EOR does.

A PEO, on the other hand, advises on payroll service, registration, and compliance requirements. This may entail putting a corporation in touch with an Employer of Record. The firm would be in charge of managing connections with both the PEO and the EOR.

Why use an EOR in Vietnam?

Vietnam is one of the world's fastest developing economies. If you want to do business or extend your operations abroad, investing in the country is a wise decision. You can do this with an employer of record without establishing a legal presence in the nation.

Workforce that is young and well-educated

Vietnam has a young and educated labor force. According to Worldometer, the median age in this country is 32.5 years old, while the World Bank estimates that 70% of the population is under the age of 35.

The Vietnamese government places a high importance on education, allocating almost 20% of its budget to it. Furthermore, the EF English Proficiency Index (EF EPI) ranked Vietnam 10th out of 25 Asian countries in terms of English language proficiency in 2019. The EF EPI also indicates that Hanoi and Ho Chi Minh City have moderate English proficiency.

Labor costs are low.

Despite a consistent GDP growth rate of 7.08 percent in 2018, according to the World Bank, the minimum wage in Vietnam remains comparatively low.

Minimum wage rates in select Asian countries:

Country: Monthly minimum wage in 2019/2020**
China: USD 341
Indonesia: USD 215
Malaysia: USD 253
Vietnam: USD 177

Matt Long CEO AT GROOVE TECHNOLOGY

Matt Long is the founder and CEO of Groove Technology. Groove Technology recruit at the top of their market, providing cutting-edge software development services to partners located across the world through a unique, integrated resource model. You can get in touch with him here, or find out more about Groove Technology Services.